Common Misconceptions in Selling a Practice


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Selling an accounting practice is a once-in-a-lifetime experience for most practice owners. Because it is such a rare event, sellers need to be aware of the key misconceptions about the process.

Misconception #1 "The seller needs to stay around for months or years to assist the buyer in the transition."

It is a common belief that the best scenario is for the seller to engage in extended and/or repeated meetings between the buyer and the clients. However, experienced buyers know that the tendency in such meetings is for the former owner and client to do all of the talking and the buyer to become the outsider.

It does not work to have the seller stay on for an extended transition if there is not sufficient work or money to go around. In the typical sale of a small to medium sized practice, the buyer wants to retain all of the staff. The buyer is energetic, hardworking, and fully capable of stepping into the shoes of the seller to do all of the work the seller has been doing. This leaves nothing for the seller to do and no money to pay him/her.

Misconception #2 "The best buyer for an accounting practice is another accounting firm."

Existing firms often do not have the time to take on another practice. In a typical sale situation, the seller is ready to retire. The buyer must be willing to assume the workload of an experienced owner and all the extra things involved in a transition. A typical firm does not have an individual available who can fill the shoes of the seller. An individual with several years of experience who has dreamed of owning a practice brings the willingness to devote much time and energy to taking over the workload and making the practice work and is much more motivated than the typical firm buyer.

Misconception #3 "The average selling price for practices determines the value of a specific practice."

While accountants might have the perception that practices sell for around one times annual gross, the reality is that in some locations such a price would be too high and in other locations too low. When considering the value of a practice realize it has many unique characteristics including location, client mix, staffing, profitability, and others. These specific qualities of a practice must be addressed to determine value, not averages.

Misconception #4 "Accounting practices have some intrinsic value which all potential buyers recognize, and with which all agree."

Buyers have quite different ideas as to value and possess different degrees of motivation and interest. Sometimes a seller turns away a very motivated and capable buyer. His or her proven costly misconception is that there are a large number of buyers and that all buyers are equally motivated and equally willing to pay some known price.

This same misconception comes into play when sellers think that the only trick is finding a buyer. Their assumption, again, is that all buyers are fully willing to pay the same price and terms. If an owner has a buyer, it is possible he or she has the one willing to pay the best price and terms, but it is just as likely he or she found one willing to pay the least.

At Accounting Practice Sales, we put our long experience at work into getting past all of the myths and misconceptions that are out there. We understand the realities of valuations, transitions and buyers as they exist now and not how it was twenty years ago. We know how to get you maximum value and how to help make the whole process as smooth as possible.

For all of your buying and selling needs, contact APS at or call 800-397-0249.

Source: Accounting Practice Sales

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